Michael Burry Takes Aim at Nvidia This Thanksgiving

While everyone has been preoccupied with Thanksgiving details, famed investor Michael Burry – portrayed by Christian Bale in "The Big Short" – has been escalating a highly aggressive campaign against Nvidia.

This is a battle worth watching, as Burry has a credible chance of winning. What sets his warning apart from other AI bubble alarms is his current position: he now commands a significant audience and operates free from regulatory constraints that could silence him, potentially making him the catalyst for the very downturn he forecasts. He's not just betting against the AI boom; he's actively trying to persuade his growing followers that the emperor, Nvidia, has no clothes.

The central question now is whether Burry can generate enough widespread doubt to seriously undermine Nvidia and, by extension, other key players in this narrative, including OpenAI.

Burry has intensified his efforts in recent weeks. He has consistently criticized Nvidia and engaged in a public spat with Palantir CEO Alex Karp after regulatory filings revealed Burry held bearish put options against both companies – a bet worth over $1 billion on their decline. (Karp appeared on CNBC to label Burry's strategy "batshit crazy," prompting Burry to mock Karp for misreading an SEC filing.) This exchange highlights the market's fundamental divide: Is AI a transformative force justifying immense investment, or are we in a speculative mania headed for a painful correction?

Burry's accusations are precise and severe. He claims Nvidia's stock-based compensation has cost shareholders $112.5 billion, effectively "reducing owner's earnings by 50%." He has implied AI companies are using creative accounting by stretching out depreciation on rapidly depreciating equipment. (Burry argues Nvidia's customers are overstating the useful life of its GPUs to justify excessive capital spending.) Regarding the celebrated customer demand, Burry suggests it's an illusion, alleging a circular financing scheme where customers are "funded by their dealers."

Burry's commentary has gained enough traction that Nvidia, despite its dominant market position and a stellar recent earnings report, felt compelled to respond. In a seven-page memo to Wall Street analysts reported by Barron's, Nvidia's investor relations team pushed back, asserting Burry's calculations are flawed – for instance, by "incorrectly included RSU taxes" (the actual share buyback figure is $91 billion, not $112.5 billion, according to the memo). The company stated its employee compensation is "consistent with peers" and firmly rejected any comparison to Enron.

Burry's retort was succinct: he never compared Nvidia to Enron. His comparison is to Cisco in the late 1990s, which overbuilt network infrastructure that lacked immediate demand, leading to a 75% stock crash when the market realized it.

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Secure your spot on the Disrupt 2026 waitlist for priority access when Early Bird tickets are released. Previous Disrupt events have featured industry pioneers like Google Cloud, Netflix, Microsoft, Box, Phia, a16z, ElevenLabs, Wayve, Hugging Face, Elad Gil, and Vinod Khosla – part of over 250 leaders delivering 200+ sessions designed to accelerate your growth and refine your competitive edge. You'll also connect with hundreds of groundbreaking startups across every industry.

By next Thanksgiving, this could all seem like a minor controversy. Or it might not.

Nvidia's stock has surged twelvefold since early 2023. The company's current market capitalization is $4.5 trillion, and its rise to become the world's most valuable company is historically unprecedented.

However, Burry's track record is mixed. His correct prediction of the housing crisis earned him fame. Yet since 2008, he has persistently forecast various downturns, leading critics to label him a "permabear." Followers who adhered strictly to his views missed significant bull markets. For instance, Burry bought GameStop early but sold before its meme-stock surge. He shorted Tesla and suffered substantial losses. After his housing call, prolonged underperformance drove frustrated investors from his fund.

Earlier this month, Burry deregistered his investment firm, Scion Asset Management, with the SEC. He cited "regulatory and compliance restrictions that effectively muzzled my ability to communicate," expressing frustration over the misinterpretation of his posts on X.

Last weekend, he launched a Substack titled "Cassandra Unchained" to advance his case against the AI industrial complex. The newsletter, with an annual subscription cost of $400, is described as Burry's "sole focus as he gives you a front row seat to his analytical efforts and projections for stocks, markets, and bubbles, often with an eye to history and its remarkably timeless patterns."

People are certainly listening. The newsletter launched less than a week ago and already has 90,000 subscribers. This brings us back to the unsettling question at the heart of this saga: Is Burry a canary in the coal mine warning of an inevitable collapse, or could his fame, his record, his unfettered voice, and rapidly expanding audience actually trigger the implosion he predicts?

History suggests this isn't far-fetched. Short-seller Jim Chanos didn't create Enron's fraud, but his prominent critiques in 2000-2001 gave other investors the confidence to question the company, accelerating its demise. Similarly, hedge fund manager David Einhorn's detailed 2008 critique of Lehman Brothers' accounting raised widespread skepticism and likely hastened the loss of confidence that led to its collapse. In both cases, the underlying flaws were real, but a credible critic with a platform created a self-fulfilling crisis of confidence.

If enough investors are persuaded by Burry's warnings of AI overcapacity, they will sell. That selling would validate his bearish stance, prompting more selling. Burry doesn't need to be correct on every detail; he only needs to be persuasive enough to start the stampede. Examining Nvidia's performance in November might suggest his warnings are gaining traction, but looking at the stock's performance for the entire year paints a less clear picture.

What is abundantly clear is that Nvidia has an astonishing market cap and its status as the AI era's most essential company to lose. Meanwhile, Burry risks little beyond his reputation, armed with a new megaphone he is likely to use at full volume for the foreseeable future.